Soybean Quality Growing More Important for Bottom Lines and U.S. Markets

Nov 16, 2010

ST. LOUIS —The United Soybean Board has accelerated its ongoing educational program to bridge a little-known but major disconnect between producers who choose soybean varieties mostly for yield and buyers who demand high-quality soybeans with high protein and oil levels.

Commodity buyers’ needs are constantly evolving. Connecting soybean growers with priorities in buyers’ selection criteria is important to ensure U.S. producers maintain their advantage over competitors and protect their bottom lines, according to the United Soybean Board.
“Soybeans produced in the U.S. are increasingly being targeted by domestic and international competitors,” said Lewis Bainbridge, a soybean farmer from Ethan, South Dakota, who serves as USB’s Domestic Marketing Committee Chairman.

In domestic markets, where soybeans are used primarily for livestock and poultry feed, high protein levels make soybeans more attractive than competitive ingredients such as DDGS and canola meal.

“Feed markets respond to a combination of ingredient price and feed quality,” says Gordon Denny, former soybean procurement manager for Bunge and 30-year industry professional. “Lower quality can decrease demand and result in a lower elevator price. Higher quality can increase demand and bring higher prices.”

High protein and oil are especially important in export markets because the risk from competitors hides beneath a positive trend: Soybean exports are steadily increasing, which is a source of pride for many producers. However, for U.S. international competitiveness to remain strong, producers should be adding quality to their seed variety shopping list.

“South America, particularly Brazil, is knocking at our door,” Bainbridge observes. “Because the country is near the equator and has a favorable climate, Brazil can target our soybeans by offering high levels of protein and oil. Brazil also has the ability to increase acreage. That combination means we have to make sure our protein and oil are as high as possible,” he explains.

Meeting the challenge through variety selection

The good news is that protecting domestic and international markets can be easily accomplished. According to Vice President of Protein Sales, CHS Oilseed Processing, Tom Malecha, “If producers ask their seed dealers to provide varieties which deliver high quality, optimally striving to achieve 35 percent protein and 19 percent oil—in addition to high yield—threats to U.S. soybeans will remain neutralized.”

“People believe when yield increases, quality decreases,” says Bainbridge. “But that’s not always the case. That tradeoff depends on the variety selected. There are varieties that deliver both high quality and yield, but producers have to ask for that combination or they will probably be sold a variety that delivers only yield.”

Another challenge being addressed by the education campaign is making producers aware of the impact quality has on their bottom line.

“Some growers ask why they should plant varieties that deliver higher quality when everybody gets the same market price whether they deliver high-protein or lower-protein soybeans,” observes Tom Kersting, Commercial Manager for South Dakota Soybean Processors. “However, the research we’ve seen shows that market price moves parallel with quality. That means everybody gets a lower market price with lower-quality beans in the mix, and a higher price with higher-quality beans. Whether they know it or not, producers are in it together.”